x and y are partners in a firm sharing profit and losses in the ratio of 5 :3 on 31st March 2018 their balance sheet was as under :
Liabilities
Creditors =50000
Provident fund=15000
Workmen's compensation reserve=40000
Capital account
X = 2,60,000
Y = 1,35,000
Assets
Bank =29000
Debtors =180000
Stock =125000
premises =150000
advertisement expenses=16000
on 1st April 2018 z is admitted as a partner .x surrenders one upon fourth of his share and Y one upon three of his share in favour of Z .Goodwill is valued at 160000 z brings in only 2 upon 5 of his share of goodwill in cash and 150000 as his capital following terms are agreed upon :
1. Premises is to be increased to rupees 200000 and stock by 5000
2. Creditors prove at rupees 60000 one bill for goods purchased having been omitted for the book
3. Outstanding rent amounted to rupees 12000 and prepaid salaries rupees 2000
4. Liability on account of provident fund was only rupees 10,000
5. liability for workmen's compensation claim was rupees 16000
prepare revaluation account capital account and the opening balance sheet also calculate the new profit sharing ratio
Dear Student,
| Revalution A/c | |||||
| Date | Particulars | Amount (in Rs) | Date | Particulars | Amount (in Rs) |
| Creditor | 10,000 | Premises | 50,000 | ||
| Outstanding Rent | 12,000 | Stock | 5,000 | ||
| Prepaid Salaries | 2,000 | ||||
| Partners Capital A/c | Providend Fund | 5,000 | |||
| X | 25,000 | ||||
| Y | 15,000 | ||||
| 62,000 | 62,000 | ||||
| Partner's Capital A/c | |||||||
| Particulars | X's Capital A/c | Y's Capital A/c | Z's Capital A/c | Particulars | X's Capital A/c | Y's Capital A/c | Z's Capital A/c |
| Advertisement Expenses | 10,000 | 6,000 | Balance b/d | 260,000 | 135,000 | ||
| Cash | 150,000 | ||||||
| Premium for goodwill A/c | 10,000 | 8,000 | |||||
| Z's Current A/c | 15,000 | 12,000 | |||||
| Revaluation A/c | 25,000 | 15,000 | |||||
| Bal C/d | 315,000 | 173,000 | 150,000 | WCR | 15,000 | 9,000 | |
| 325,000 | 179,000 | 150,000 | 325,000 | 179,000 | 150,000 | ||
| Balance sheet | |||
| Liabilities | Amount (in Rs) | Assets | Amount (in Rs) |
| Creditors | 60,000 | Debtors | 180,000 |
| Provident Fund Liability | 10,000 | Stock | 130,000 |
| Outstanding Liability for workmen claim | 16,000 | Premises | 200,000 |
| Outstanding rent | 12,000 | Bank | 197,000 |
| Capital | Prepaid Salaries | 2,000 | |
| X | 315,000 | ||
| Y | 173,000 | Z's Current A/c | 27,000 |
| Z | 150,000 | ||
| 736,000 | 736,000 | ||
Calculation of new profit sharing ratio is not provided therein , which would be as follows:
Old Ratio of X & Y is 5:3
X's Sacrifice =
Y's Sacrifice =
Thus Z's share =
And sacrificing ratio of X & Y is
Now Z brings only
Thus, For remaining amount that could not be brought in as goodwill , Z's Current A/c would be debited & X & Y's Capital A/c would be credited
Z's Total share of goodwill =
Share not brought by Z =
Hope this helps
Regards,